S&amp;P: Skeptics fueled downgrade

A Standard & Poor’s director said for the first time Thursday that one reason the United States lost its triple-A credit rating was that several lawmakers expressed skepticism about the serious consequences of a credit default — a position put forth by some Republicans.

Without specifically mentioning Republicans, S&P senior director Joydeep Mukherji said the stability and effectiveness of American political institutions were undermined by the fact that “people in the political arena were even talking about a potential default,” Mukherji said.

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“That a country even has such voices, albeit a minority, is something notable,” he added. “This kind of rhetoric is not common amongst AAA sovereigns.”

The statement seems likely to bolster one Democratic line of attack, that it was tea party intransigence — not a shortcoming of leadership by President Barack Obama — that is to blame for the U.S. downgrade, from AAA to AA+. Obama himself called on Republicans to “put country ahead of party” Thursday — a dig at conservatives in Congress who are blocking his agenda.

GOP leadership in the House and Senate was vocal in warning about the dangers of default. But some lawmakers blasted warnings by the Obama administration that a failure to raise the debt ceiling would unleash an economic catastrophe, including Republican presidential candidate Rep. Michele Bachmann (R-Minn.), who voted against the debt limit increase and said the nation would avoid default even without a deal.

“I want to state unequivocally for the world, as well as for the markets, as well as for the American people: I have no doubt that we will not lose the full faith and credit of the United States,” Bachmann said

In reaction to the statements by S&P on Thursday, however, Rep. Tom McClintock (R-Calif.) said the firm had misinterpreted the GOP position.

“No one said that would be acceptable,” he said of a default. “What we said was in the event of a deadlock it was imperative that bondholders retain their confidence that loans made to the United States be repaid on schedule.”

More than 100 House Republicans backed a measure sponsored by McClintock that created a plan if the country failed to raise the debt ceiling - prioritizing debt payments over other obligations.

In the Senate, Sen. Pat Toomey (R-Pa.) introduced the bill, which he said in a Wall Street Journal editorial could force “sudden and severe” spending cuts.

“Projects would be postponed, some vendor payments would be delayed, certain programs would be suspended, and many government employees might be furloughed,” Toomey wrote in January, acknowledging that he hoped the drastic scenario might be avoided.

The Treasury Department said the plan constituted a form of default, however, since salaries, taxes and contract payments would have gone unpaid.